Caleb Lawrence – KPIG-KPYG Radio – Share the Wealth – February 23, 2017
The major averages enter the final hour mixed on little news. The January Chicago Fed National Activity Index slipped .19 on production weakness. The 3-month moving average was relatively unchanged at -.03 continuing its negative trend that dates to August of 2015 or 17-months.
The Kansas City Fed regional index gained 5 points in February to 14 a 5.5 year high on strength in new orders as fracking activity continues to pick up despite mounting debt and a lack of profitable cash flow with oil below $60 per barrel.
With economic growth as measured by Gross Domestic Product or GDP continuing to track 2% or less, the latest estimate for the first quarter is 1.9% and marks 9 consecutive quarters of GDP averaging less than 2%. The Fed relentlessly talks higher interest rates despite considerable data questioning the strength of the economic recovery. With the latest Federal Open Market Committee or FOMC meeting notes showing a “fairly soon” wording, doesn’t get much more vague than that.
With the whole concept of risk seemingly absent from the markets and the minds of investors Volatility has hit a 21-year low as measured by the VIX or Volatility Index. 21 year low or not, risk is still there, I’ll go so far as to guarantee it, just like death and taxes.